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Kao Net Sales Increase 1.5% in Q1 2013

Posted: May 1, 2013

Kao announced its consolidated business results for the three months ended March 31, 2013, the first quarter of the fiscal year ending December 31, 2013. Net sales were ¥289 billion, an adjusted growth of 1.5%. The results were affected by the weak global economy.

In the Japanese economy, despite some remaining weakness, there were early signs of recovery due to a sense of expectation regarding government economic measures. The household and personal care products market in Japan, a key market for Kao, grew by 1% on a value basis compared with the same time period in 2012, although consumer purchase prices fell moderately. The cosmetics market in Japan contracted by 1%, but signs of recovery became apparent in March.

Net sales increased 1.5% compared with the first quarter of 2012. Excluding the effect of currency translation, net sales would have decreased 2.6%. In the consumer products business division, sales were ¥237.7 billion, an increase of 2.5% compared to Q1 2012, due in part to the effect of intensifying competition in sales of the beauty care business.

In Japan, sales decreased 2% to ¥186.3 billion. Although Kao took measures including launching new products in response to changing consumer lifestyles and enhancing proposal-based sales, some products were impacted by the intensifying competition and market contraction. In Asia, sales increased 30.2% to ¥26.9 billion. Excluding the effect of currency translation, sales would have increased 12.6%. Steady growth continued as a result of integrated management in Asia, including Japan, and the company carried out aggressive measures including collaboration with retailers and utilization of wholesale channels, and sales of baby diapers in China targeting middle-class consumers. In the Americas, sales increased 16.2% to ¥15.8 billion; excluding the effect of currency translation, sales would have increased 0.4%, helped by improved skin care product sales. In Europe, sales increased 16.6% to ¥15.8 billion, which translates to a 2% increase with currency translation. The professional hair care products division helped contribute to this sales growth.

Specifically for Kao’s beauty care division, overall sales increased 2% compared with the first quarter of 2012 to ¥129 billion. Excluding currency translation, sales decreased 2%. Sales of cosmetics decreased 3.4% compared with Q1 2012 to ¥58.1 billion.

In Japan, in a market environment where polarization into low-priced and high-priced segments is in progress, Kao continued to work to reinforce focal brands. Sales increase for counseling brands Blanchir Superior whitening skin care, Sofina Primavista base makeup and the renewed Grace Sofina skin care line, as well as the self-selection brands Kate makeup and Freshel skin care. However, sales in Japan decreased compared with the first quarter of restated 2012 with the impact of weak market conditions in the mid-priced segment.

Sales of skin care products in Japan increased, with strong performance by Biore facial cleanser, Biore U body cleanser and Curel derma care products. In Asia, Biore performed strongly and sales grew, while in the Americas, sales of Jergens hand and body lotions increased, partly due to the effect of product improvements.

Sales of hair care products in Japan decreased compared with the first quarter of restated 2012 due to intensified competition for shampoos and conditioners and the impact of the contraction of the hair color products market. In Asia, sales of Liese foam hair color increased, while in the Americas and Europe, sales of the Goldwell professional hair care brand increased.

Learn more about the details of Kao’s Q1 2013 financials here.